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Tuesday, 11 June 13
COAL: NO SIGN OF RECOVERY - GABRIELLA
 COALspot.com: We attended the 19th Annual Coaltrans Asia Conference, where we found most of the speakers were not very optimistic on the outlook for coal mining in the months ahead. The main concern is abundant supply outreaching demand growth.
We maintain an UNDERWEIGHT recommendation on the sector.
However, for investors still seeking some exposure to the coal mining sector, PTBA is a solid defensive play given:
1) its low cost structure and defensive earnings,
2) its abundant reserves supporting strong production growth and
3) its strong balance sheet. Going forward, we foresee further declines in EPS due to continued depressed coal prices which will result in lower Target Prices from current levels. Below are some key takeaways:
Coal Mining Conditions in Indonesia as the biggest exporter
As of May 2013, Indonesia’s coal resources amounted to 159bn tons with coal reserves of 32bn tons – about 3% of the world’s coal reserves. Presently, there are 76 Coal Agreements (PKP2B) and 3,892 coal licenses (IUP). Most of them are for operations in Kalimantan and Sumatra. The majority are in Kalimantan which has 61 PKP2B (80%) and 2,670 IUP (69%). All in all, Kalimantan accounts for around 90% of the total national coal production. Most of the IUP (around 80%) are at the exploration stage with the rest in the production stage. There are problems with around 400 IUP. Most of the coal production is undertaken by coal agreement holders and SOE (which account for around 70% of the national coal production).
Fuelling Indonesia’s domestic coal demand: an additional 55GW of power generation capacity
Indonesia’s electricity demand growth is still high (9.4% per year), with PLN, the state electricity company as the biggest coal buyer in Indonesia (66mn tons in 2013). PLN has stated that electricity supply in Indonesia will continue to rely on coal fired power plants (CFPP) for at least the next 10 years given the relatively cheap production costs involved. By 2020, PLN expects total additional power generation capacity to reach 55GW (PLN: 31GW, IPP: 24GW). Of this amount, 35GW or 65% is expected to come from coal power plants translating into additional coal demand of around 100mn tons p.a.
China’s Coal Import Restrictions: 50mn tons from Indonesia
From 2010 to 2012, China’s thermal coal imports increased each year, more than doubling from 71mn tons to 155mn tons, with Indonesia’s thermal coal amounting to 54% of the total in 2012. This year, China is expected to import 380mn tons of coal in total (+31% or half last year’s growth rate). One of the hot issues being discussed was China’s coal import restrictions stipulating: 1) a minimum CV of 3,750kcal/kg (NAR), 2) maximum sulphur content of 2% and 3) maximum ash content of 25%. Around 30% of China’s steam coal imports - or about 50mn tons coming from Indonesia - were lignite. India would benefit from China implementing an imports ban as it would mean lower prices. In 1Q13, however, China’s coal imports still showed an increase of 30% yoy.
Future of Indonesia’s low rank coal
The government seeks a greater role for domestic coal, especially in LRC (mine mouth power plants, gasification, liquefaction). Indonesia has abundant low rank coal resources, accounting for 40% of Indonesia’s total resources, with medium and high rank coal accounting for about 50% and 10%, respectively. There is a need to foster greater international cooperation to develop the technology for the utilization of low rank coal for domestic needs by implementing Clean Coal Technologies with build operate transfer schemes (BOT schemes) to improve calorific value and efficiency.
A Challenging Outlook
The outlook for coal mining will remain challenging, in our view, given the currently depressed coal prices (down 5% average YTD) and persistent global economic headwinds. China and India combined account for more than 30% of the world’s seaborne import volume. Their dominance is expected to continue with potential growth seen in India. Environmental and Regulatory issues will limit coal imports growth, however, as reflected in China’s draft proposal for a ban on imports and the current development of Hydropower and Nuclear generation.
Adding to the woes, Indonesia’s new draft regulation (increasing coal royalties, export quotas) has worsened the investment climate for coal producers in the country.
The author of this article Ms. Maureen Natasha, an equity analyst in PT Danareksa Sekuritas. Danareksa is a pioneering Indonesian financial institution and was the first to introduce mutual funds in Indonesia. It was also the first to launch a US Dollar-denominated fixed-income fund and promote syariah-based investments. Today, Danareksa is the only local company to offer direct market access services to clients worldwide and has grown to become the company that has underwritten the most equity and debt placements in Indonesia.
Views and opinions / conclusion expressed herein are personal views of the author and not that of COALspot.com. This article is subject to disclaimer terms of PT. Danareksa Sekuritas.
If you believe an article violates your rights or the rights of others, please contact us.
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Tuesday, 25 June 13
NEWCASTLE PORT SHIPPED OUT MORE COAL W-O-W
COALspot.com - Newcastle port in Australia has loaded 3,101,378 tons of coal for the week ended 0700 hours 24 June 2013, Newcastle Port Corp. ...
Monday, 24 June 13
INDONESIA COAL SWAP FOR AUGUST 2013 DELIVERY GAINS WEEK ON WEEK
COALspot.com – Coal prices for immediate supply contracts have started moving up, but prices for next year supply shows a negative trend ...
Sunday, 23 June 13
BDI CROSSED ITS PSYCHOLOGICAL BARRIER THIS WEEK - VISTAAR
COALspot.com : The BDI crossed the psychological barrier of 1000 points after many months and closed at 1,027 points, which were up by 14.11 pct wee ...
Sunday, 23 June 13
SHIP PRICES NOT FOLLOWING FREIGHT MARKET FUNDAMENTALS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Although it's been the case in many occasions in the past, it appears that ship prices haven't been quite following freight market fundamentals, i ...
Friday, 21 June 13
U.S. COAL PRODUCTION INCREASED WEEK ON WEEK, EIA SAYS
COALspot.com – United states the world’s second largest coal producer produced totalled approximately 19.70 million short tons (mmst) of ...
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- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- White Energy Company Limited
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
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